The Global Lighthouse Network Playbook for Responsible Industry Transformation - WHITE PAPER MARCH 2022
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In collaboration with McKinsey & Company The Global Lighthouse Network Playbook for Responsible Industry Transformation WHITE PAPER MARCH 2022
Images: Getty Images
Contents
Preface 3
Executive summary 4
1 103 Fourth Industrial Revolution front-runners are showing what 5
is possible
1.1 A growing network focused on the future 6
1.2 Increasing network diversity and proven value capture 7
2 Proven approaches have endured powerful storms 13
2.1 Lighthouses have scaled across production networks and 15
value chains
2.2 Six enablers lie at the core of success 16
3 Responsible transformation at scale 20
3.1 Sustainability 21
3.2 Workforce engagement 22
4 Continuing the journey and expanding the Lighthouse Playbook 25
Contributors 27
Endnotes 28
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The Global Lighthouse Network Playbook for Responsible Industry Transformation 2
March 2022 Global Lighthouse Network:
The Playbook for Responsible
Industry Transformation
Preface
Francisco Betti
Enno de Boer
Head of Advanced
Partner and Global Head
Manufacturing and Value
Operations Technology,
Chains, member of the
McKinsey & Company, USA
Executive Committee
In the current geopolitical context, local Those strains have radically changed everyday
manufacturing and supply chain resilience experiences, including how people work. As
are becoming increasingly important. At the companies have grappled with remote work,
same time, organizations face new obstacles distancing and attrition, they have also been affected
as they strive to engage their workforce and by the social and emotional toll of such stressors.
sustain operations amid international unrest and Lighthouses have addressed these difficulties by
economic headwinds. Furthermore, there are fostering community through a shared sense of
new pressures related to the need to maintain purpose. They have invested in their people through
sustainability commitments and accelerate the learning and development, building a culture of
transition to renewable energy, while addressing empowerment and ownership among people who
more immediate energy market disruptions. believe in what they are doing. In so doing, they
These concurrent challenges call for innovation, have prioritized genuine workforce development – a
leadership and inspiration – indeed, manufacturers true source of resiliency and a strategic advantage.
need a playbook to guide responsible industry
transformation now more than ever. Exacerbating the complexity of the past two
years is the fact that the pandemic emerged
The Global Lighthouse Network includes 103 amid the ongoing climate crisis. Yet, even while
members from across the planet, including confronting so many other trials, leading companies
manufacturers and other organizations along have responded, stepping forward to set new
the value chain. From the initial idea four years benchmarks and put innovation to work in the
ago – that embracing digital technologies and name of environmental sustainability. Defying the
new working modes would enable an evolution conventional wisdom that good stewardship of the
in manufacturing – to where we are today, the planet and profitability are at odds with one another,
network has made a compelling case for the power they have shown how responsible changes can
of Fourth Industrial Revolution technology to boost boost eco-efficiency, yielding sustainability benefits
productivity, growth and sustainability. while achieving business goals – and even realizing
competitive advantages.
As remarkable as the initial value proposition
was, little did we know then just how soon As the world grapples with many challenges,
this information would become vital. As Lighthouses continue to illuminate the way forward
world events upended conventional methods into a future of responsible manufacturing. Read on
and pushed supply chains to the brink, the to explore this newest set of insights from the Global
lessons of what we can confidently now call Lighthouse Network, the Lighthouse Playbook.
the Lighthouse Playbook became even more This new guide presents the insights of 103
relevant. Core enablers – innovative approaches leaders about responsible transformation at scale
driving successful Fourth Industrial Revolution through workforce engagement and environmental
transformation – have proved crucial as companies sustainability measures – that is, transformation that
have endured unprecedented strains. prioritizes people and the planet.
The Global Lighthouse Network Playbook for Responsible Industry Transformation 3
Executive summary
The Global Lighthouse Network, which has grown Pandemic challenges and climate imperatives have
from 16 to 103 sites since 2018, offers insight, boosted environmental, social and governance
guidance and inspiration for a world facing numerous (ESG) concerns, putting a focus on environmental
challenges, including recent geopolitical turmoil. sustainability and workforce engagement. Pragmatic
Since its inception, the experience of this diverse efforts can reduce energy consumption, water
network has shown what is possible through digital impact, carbon emissions and waste generation.
transformation at scale. The accumulation of this Lighthouses defy conventional wisdom, showing that
knowledge informs this Lighthouse Playbook, a guide sustainability and competitiveness can be interwoven.
for organizations that wish to be part of the future of
manufacturing through responsible production that Genuine workforce engagement emerges when
prioritizes productivity, sustainability and people. companies create communities of committed people
who believe in what they are doing. Lighthouses
New Lighthouses have confirmed the lessons foster this through the pursuit of learning and
of early sites while offering more detail about development, building a culture of empowerment
what works; and this confirmation grows and ownership, emphasizing collaboration and
stronger as the network diversifies while connections, recognizing and celebrating the impact
proving value capture across key performance of people and products, and prioritizing workers’
indicators. Meanwhile, the new designation of voices. Fourth Industrial Revolution technologies
“Sustainability Lighthouse” has been conferred have accelerated this engagement in various ways,
upon leaders in environmental responsibility. such as by reducing repetitive tasks and involving
workers in higher-level tasks, including creative
The lessons of the Lighthouse Playbook were problem-solving.
already emerging before the pandemic. The first is
that two modes of successful scaling exist across The Lighthouse Playbook calls for responsible
production sites and along value chains. The second scaling that prioritizes the planet and people.
is that six enablers lie at the core (this report takes This dual challenge means aiming at genuine
a closer look at two of them, the agile approach workforce engagement while focusing on
and the transformation office). Lighthouses have environmental stewardship. Companies who
a proven set of commonalities manufacturers can wish to join the front-runners are called on to
look to; indeed, the trends of Lighthouses today will embark on this transformational journey into
become the standards of tomorrow. the sustainable future of manufacturing.
The Global Lighthouse Network Playbook for Responsible Industry Transformation 4
1 103 Fourth Industrial
Revolution front-
runners are showing
what is possible
The World Economic Forum, in collaboration it sought to build a collaborative network willing to
with McKinsey & Company, acted in 2018 to share insights to benefit industry, people and the
recognize, encourage and accelerate the at-scale Earth itself. An additional aim was to explore how
digital transformation of manufacturing through manufacturers could keep people at the centre of
the Global Lighthouse Network. This initiative a better future for workers. Likewise, it embraced
explored how exceptional companies were the recognition that on a planet confronting climate
demonstrating operational and financial impact change, achieving digital transformation at scale
through digital transformation at scale. Meanwhile, would be the key to sustainability.
The Global Lighthouse Network Playbook for Responsible Industry Transformation 5
1.1 A growing network focused on the future
As the Global Lighthouse Network has grown to Sustainability Lighthouses
103 members from just 16 sites in 2018, resilience,
sustainability and workforce engagement have
emerged as top priorities. New sites have confirmed The new designation of “Sustainability Lighthouses”
the lessons of the early Lighthouses while offering was introduced in September 2021 to recognize
even more granular detail through many more use environmental responsibility leaders. They have
cases. Lighthouses are harnessing Fourth Industrial achieved impressive eco-efficiency: their operations
Revolution technologies to accelerate scaling through are yielding sustainability returns that are good for
enablers, such as agility and strong transformation the planet while also achieving business goals. This
governance while ensuring environmental brings the total number of designations to six.
sustainability and boosting workforce engagement.
FIGURE 1 The Global Lighthouse Network comprises 103 Lighthouses as of March 30, 2022
Since the Lighthouse Network was presented in the Reimagining Operations for Growth white paper, it has grown by 13 new and 3 sustainability
awarded Lighthouses. These have been added by the network’s expert panel, bringing the total to 103 Lighthouses identified across different
industry sectors. All these have joined a unique, collaborative learning journey across organizations to share insights and experiences while
incubating potential new partnerships. This white paper explores the latest achievements of the network, with a focus on sustainability.
2
a
b
1
8 13
31 32
1 3 7 11
9 43
23 24 30 33 42
12 41
10 34 35
3 4
29 36 40
25 5
23 24 37 38
c
6
39
25
26
27
28
26
27
28
4
4
5
New Sustainability Lighthouses Existing Sustainability Lighthouses New Lighthouse Existing Lighthouse
a 2 6 10
Johnson & Johnson Janssen Teva Pharmaceuticals Johnson & Johnson Consumer Procter & Gamble
Cork, IE Amsterdam, NL Health, Bangkok, TH Guangzhou, CN
b 3 7 11
Schneider Electric Johnson & Johnson Janssen Midea Midea
Le Vaudreuil, FR Latina, IT Jingzhou, CN Hefei, CN
c 4 8 12
Western Digital Unilever Haier BOE Technology Group
Penang, MY Dapada, IN Zhengzhou, CN Fuzhou, CN
1 5 9 13
Sanofi Schneider Electric Bosch Automotive LG Electronics
Paris, FR Hyderabad, IN Changsha, CN Changwon, KR
Note: The network’s last white paper, Global Lighthouse Network: Unlocking Sustainability through Fourth Industrial Revolution Technologies (September 2021),
provides details of previously selected Lighthouses
Source: World Economic Forum Global Lighthouse Network, 2022
The Global Lighthouse Network Playbook for Responsible Industry Transformation 6
1.2 Increasing network diversity and proven
value capture
Part of what makes the Global Lighthouse Network powering digital devices to the cars people drive
unique is that it is not centred on any one type of and the batteries and fuels powering them to the
manufacturing. Rather, the shared knowledge and pharmaceuticals that help keep people healthy and
experiences play out in the manufacture of diverse the detergent used for washing clothes.
products ranging from the cutting-edge microchips
FIGURE 2 The Global Lighthouse Network is growing in size and diversity across all industry sectors
Consumer packaged goods
Alibaba Henkel Procter & Gamble Tsingtao Brewery Co Unilever
Apparel, CN Consumer goods, MX Consumer goods, CZ Consumer goods, CN Consumer goods, IN
Henkel Procter & Gamble Procter & Gamble Unilever Unilever
Consumer goods, DE Consumer goods, CN Consumer goods, FR Consumer goods, CN Consumer goods, UAE
Henkel Procter & Gamble Procter & Gamble Unilever
Consumer goods, ES Consumer goods, CN Consumer goods, US Consumer goods, CN
Process industries
Baoshan Iron & Steel Petkim Renew Power Saudi Aramco Tata Steel
Steel products, CN Chemicals, TR Renewable energy, IN Oil and gas, SA Steel products, IN
DCP Midstream Petrosea Saudi Aramco STAR refinery Tata Steel
Oil and gas, US Mining, ID Oil and gas, SA Oil and gas, TR Steel products, NL
MODEC POSCO Saudi Aramco Tata Steel
Oil and gas, BR Steel products, KR Oil and gas, SA Steel products, IN
The Global Lighthouse Network Playbook for Responsible Industry Transformation 7
FIGURE 2 The Global Lighthouse Network is growing in size and diversity across all industry sectors
(continued)
Advanced industries
AGCO De’Longhi Groupe Renault Micron Schneider Electric
Agricultural equipment, DE Home appliances, IT Automotive, FR Semiconductors, TW, CN Electrical components, CN
Arçelik Ericsson Haier Midea Schneider Electric
Home appliances, TR Electronics, US Appliances, CN Home appliances, CN Electrical components, FR
Arçelik Fast Radius with UPS Haier Midea Schneider Electric
Home appliances, RO Additive manufacturing, US Home appliances, CN Home appliances, CN Electrical components, ID
AUO Flex Haier Midea Schneider Electric
Optoelectronics, TW, CN Electronics, AT Home appliances, CN Home appliances, CN Electrical components, IN
BOE Technology Group Ford Otosan Haier Midea Schneider Electric
Optoelectronics, CN Automotive, TR Home appliances, CN Home appliances, CN Electrical components, US
BMW Group Foton Cummins Hitachi Nokia Siemens
Automotive, DE Automotive, CN Industrial equipment, JP Electronics, FI Industrial automation products, CN
Bosch Automotive Foxconn HP Inc. Phoenix Contact Siemens
Automotive, CN Electronics, CN Electronics, SG Industrial automation, DE Industrial automation products, DE
Bosch Automotive Foxconn Infineon Protolabs Weichai
Automotive, CN Electronics, CN Semiconductors, SG Additive manufacturing, US Industrial machinery, CN
Bosch Automotive Foxconn Innolux Rold Western Digital
Automotive, CN Electronics, CN Optoelectronics, TW, CN Electrical components, IT Electronics, MY
CITIC Dicastal Foxconn Industrial Internet LG Electronics SAIC Maxus Western Digital
Automotive, CN Electronics, CN Electronics, KR Automotive, CN Electronics, TH
Contemporary Amperex Groupe Renault LS ELECTRIC Sandvik Coromant Wistron
Technology Automotive, BR Electrical components, KR Industrial tools, SE Electronics, CN
Electronics, CN
Groupe Renault Micron Sany
Danfoss Automotive, FR Semiconductors, SG Industrial equipment, CN
Industrial equipment, CN
Pharmaceuticals and medical products
Bayer Johnson & Johnson Janssen Johnson & Johnson Johnson & Johnson Vision Care Teva Pharmaceuticals
Division pharmaceuticals, IT Pharmaceuticals, IE DePuy Synthes Medical devices, UK Pharmaceuticals, NL
Medical devices, CN
GE Healthcare Johnson & Johnson Johnson & Johnson Vision Care Zymergen
Medical devices, JP Consumer Health Johnson & Johnson Medical devices, US Biotechnology, US
Self-care products, SE DePuy Synthes
Medical devices, IE
GSK Novo Nordisk
Pharmaceuticals, UK Johnson & Johnson Pharmaceuticals, DK
Consumer Health Johnson & Johnson
Self-care products, TH DePuy Synthes
Johnson & Johnson Janssen Sanofi
Medical devices, US
Pharmaceuticals, IT Pharmaceuticals, FR
Source: World Economic Forum Global Lighthouse Network, 2022FIGURE 3 The Lighthouses show a variety of new use cases
Site Change story Top 5 use cases Impact
Asia
LG Electronics Facing the growth of its product portfolio complexity by Digitally-enabled end-to-end material transport system 42% Logistics labour cost
Changwon, Korea 70%, rising quality expectations from customers and labour
shortages, LGE re-designed an old factory in Changwon Digital twin of material transport system 96% Line downtime
into a digital Lighthouse plant leveraging flexible automation,
digital performance management and AI to improve Digitally-enabled flexible manufacturing 17% Overall plant productivity
productivity by 17% and field quality by 70% while reducing
inventory by 30% and energy consumption by 30%. Predictive maintenance aggregating data based 50% Equipment downtime
on historical and sensor data
Democratization of quality inspection automation 96% False detection rate
through AI platform
Unilever Driven by the need to accelerate the pace of innovation and Consumer-centric Agile innovation using Digital Voice of 50% Product development lead time
Dapada, India speed of response to consumer demand while augmenting the Consumer
cost compe-titiveness in an increasingly challenging market
and acting on sustainability goals, Unilever Dapada deployed Predictive analytics to eliminate chronic quality defects in 78% Manufacturing defects
digital, automation and AI machine learning across its end-to- product formulation changes
end value chain to shorten product development lead time by
50%, and to reduce manufacturing costs by 39% and energy Machine-learning-enabled demand planning and 50% Lead time to retailers
use by 31%. customer replenishment
Digitally-enabled man-machine matching and AI-enabled 39% Productivity increase
skill building
AI-guided machine performance optimization 10% OEE
Midea Due to consumer expectations with higher product Lights-out injection moulding plant enabled by AI 20% Injection workshop OEE
Jingzhou, China complexity, Midea Jingzhou, as a 30-year-old factory,
adopted flexible automation, IoT and AI at scale to Production planning optimized by advanced analytics 25% Production lead time
transform their manufacturing system, increase labour
productivity by 52%, reduce production lead time by 25% Digitally-enabled flexible manufacturing 99.9% Changeover time
and eliminate 20% utility consumption per unit.
AI-powered process control 76% Defect rate foaming
Smart workforce upskilling tool 30% Labour productivity
Schneider Electric Facing changing customer demands and 54% business End-to-end real-time supply chain visibility platform and 33% Reliability on delivery on time
Hyderabad, India growth, Schneider Electric implemented Fourth Industrial control tower
Revolution technologies such as IIoT Infrastructure,
predictive/prescriptive analytics and AI deep learning. This End-to-end critical process monitoring and digital process 68% Supplier issues occurrence
resulted in a reduction of field failure by 48% and lead time capability measurement
by 67%, while manufacturing efficiency improved by 9%.
Production planning and capacity management optimized 67% Lead time
by advanced analytics
AI-powered optical inspection 18% Field failure rate
Digital manufacturing performance management 6% Energy consumption
Bosch Facing a 20% labour wage increase, a YoY 10%+ price Integrated end-to-end physical logistics platform 36% Production lead time
Automotive reduction request from customers and a high fluctuation
Changsha, China in customer orders, Bosch Automotive Changsha Algorithm-based consumable lifetime extension 50% Changeover time
implemented 45 Fourth Industrial Revolution use cases with
automation and AI to increase competitiveness, maintaining Predictive maintenance aggregating data based on 25% Maintenance cost
their market position with 100% new energy vehicle (NEV) historical and sensor data
customer portfolio penetration and reaching carbon neutral.
Transparent shop floor management 20% Labour productivity
AI-enabled production energy management 18% Electricity consumption
Johnson Facing agility, profitability and cost-to-serve challenges, Digital twin for speed to market and productivity improvement 83% Speed to market
& Johnson Johnson & Johnson’s Bangkok site adopted Fourth
Consumer Health Industrial Revolution technology such as a collaborative IoT-based advanced analytics energy management system 23% Electricity consumption
Bangkok, Thailand supply chain control tower, computational fluid dynamics,
AI energy optimization and advanced data analytics on AI-powered optical inspection 66% Lead time
logistics. The value chain delivered 47% revenue growth
with a 25% inventory reduction and reduced 43% end-to- End-to-end real-time supply chain visibility platform 25% Inventory reduction
end supply chain lead time, improved productivity by 42%
and resulted in 20% carbon footprint optimization. Cloud-based data analytics and robotic process automation 22% Logistics cost
to optimize container booking and loading
BOE Technology To pursue premium product market share with high quality AI-enabled close loop quality 75% Defect rate
Group expectation, BOE Fuzhou has widely adopted AI and
Fuzhou, China advanced analytics in their fully automated production Repair process automation 20% Inspection direct labour
system to achieve best- in-class quality excellence,
equipment efficiency and energy sustainability with a new Digital dashboards to monitor OEE performance 66% OEE
product yield ramp-up period shortened by 43%, cost
per unit decreased by 34% and output increased by 30% Dynamic scheduling with auto dispatching 11% Cycle time
without major capex investment.
AI-enabled energy management 38% Utility consumption
The Global Lighthouse Network Playbook for Responsible Industry Transformation 9FIGURE 3 The Lighthouses show a variety of new use cases (continued)
Site Change story Top 5 use cases Impact
Asia continued
Procter & Gamble In order to meet 45% increased e-commerce demands, Digital integrated business planning 30% Inventory level
Guangzhou, China P&G Guangzhou leveraged AI, flexible automation
and digital twins to integrate multi systems across the Dynamic delivery optimization 15% Logistics cost
value chain to serve omni- channel consumers. This
increased the responsiveness of their supply chain with Dynamic delivery optimization 90% Lead time
a 30% reduction in inventory, 15% reduction in logistics
cost and 99.9% on time delivery within 3 years. Digital twin orchestrated warehouse operations 25% Warehouse throughput
Automated change over optimization in one click 6% Warehouse throughput
Midea Targeting domestic high-end product segments and End-to-end real-time supply chain visibility platform 56% Delivery lead time
Hefei, China overseas market expansion, Midea Hefei Laundry widely
deployed AI and IoT technologies across end-to-end value Blockchain-enabled logistics execution 30% Warehouse labour
chains to form a faster response and higher efficiency
supply chain, resulted in lead time reduction of 56%, a Digital tools to enhance a connected workforce 45% Assembly failure rate
customer report defect rate reduction of 36% and labour
productivity improvement a 45%. AI-powered noise inspection 36% Defect rate
Connected devices to track and measure product performance 67% Service lead time
Haier Facing a booming water heater market and the increasing Digital supplier performance management 23% Raw material delivery lead time
Zhengzhou, China requirement of high-end product and service, Haier
Zhengzhou, as a newly built plant, leveraged big data, 5G Real-time asset performance monitoring and visualization 17% Productivity
and edge computing and ultra-wideband solutions to build
close connections with the suppliers, plant and customers, AI-powered optical inspection 24% Assembly efficiency
which sped up order response lead time by 25%,
increased production efficiency by 31% and improved Intelligent test communication platform 22% Test efficiency
quality performance by 26% between 2020, when it
started, and 2021. Connected devices to track and measure product performance 14% End customer energy usage
Europe
Johnson & Janssen Latina deployed Fourth Industrial Revolution Digitally-enabled flexible manufacturing 60% Process time
Johnson Janssen solutions that deliver faster, competitive and Agile launches
Latina, Italy of new products and quality release to reduce non- Digitally-enabled batch release 84% Quality control lead time
conformance by 30% and increase product release lead
time optimization by 84% while reducing energy costs by Value chain digital twin 13% Lead time
10% and logistics labour costs by 72%.
Robotics-enabled logistics execution 72% Logistic labour cost
Energy optimization by Analytics as a Service 15.5% GHG emissions
Sanofi With the ambition to accelerate saving generation, two Should-cost modelling for “make vs buy” decisions 10% Category spend
Paris, France years ago Sanofi embarked on a digital and analytics
transformation of its procurement operations. To date, Analytics platform for tenders 67% Leadtime for tender
it has built and deployed six products: a data platform,
should-cost modeling and input cost monitoring, smart Digital supplier performance management 100% Reporting time
tender analytics and a supplier performance tracker and
cockpit, which have delivered 10% savings on addressed Digitally-enabled negotiations through an electronic auction 281% E-auction savings delivered
spend and transformed the way the company works.
Global spend data lake 13% Labour required
Teva Global Procurement is the main contributor to TEVA’s Global spend data lake 47% External spend transparency
Pharmaceuticals ambitious gross margin improvement programme and
Amsterdam, contributes to the free cash flow target, with the aim of Should-cost modelling to support “make versus buy” decisions 51 mUSD Category savings
Netherlands delivering 3x historical cost of goods sold (COGS) savings
by the end of 2024. To achieve this, Global Procurement Analytics-driven procurement supported by spend intelligence 1,583% Supply resilience – material
implemented Fourth Industrial Revolution technologies and an automated spend cube changes planned
within 1.5 years, increased labour efficiency by 30%,
upskilled its workforce and optimized cross-functional Digitally-enabled negotiations 400% Negotiations conducted for API1
processes to break down silos. It is leading the way for the
Fourth Industrial Revolution at Teva. Smart spend category creation 90% Time needed for category strategy
1
Active pharmaceutical ingredient
The Global Lighthouse Network Playbook for Responsible Industry Transformation 10FIGURE 4 Sustainability Lighthouses show Fourth Industrial Revolution- enabled sustainability impact
Site Change story Top 2 use cases Impact
Western Digital Western Digital achieved a reduction in energy of Smart energy usage optimization via real-time 39.9% GHG (Scope 2)
Penang, Malaysia 41%, in water consumption of 45% and in material IIoT applications
waste of 16% through a vertically integrated smart
factory. Fourth Industrial Revolution technologies, such
as IOT sensors, digital twin modeling, an analytics-
powered plant management system and lights-out
automation with machine learning increased their Lights-out automation with digital twin capacity 45.6% Energy usage in
sustainability impacts, while the site has grown at a optimization for sustainability production assembly
43% compound annual growth rate (CAGR) in the last
four years. This concerted effort enabled the Malaysia
Green Building Index certification for the site.
Johnson & Janssen Sciences Ireland has been long supporting Digital twin of sustainability 32% CO2 avoidance
Johnson Janssen regional initiatives for sustainability improvement and is now
Cork, Ireland enabling the corporate 2030 pledge of carbon neutrality.
Through Fourth Industrial Revolution-enabled real-time
release, adaptive process control and other sustainability
efforts, the site has optimized its processes and reduced IIoT real-time sensor-based data aggregation for energy, 43% Material waste
carbon emissions per kg of product by 56%, while the emissions, waste and water management
site footprint was expanded by 34% to meet the growing
business needs.
Schneider Electric Schneider Electric Le Vaudreuil has implemented Industrial Sustainability optimization powered by advanced 27% Energy used for compressed air
Le Vaudreuil, France IoT IIoT) sensors connected to digital platforms, unlocking digital solutions
data to optimize energy management (25%), reduce
material waste (17%) and minimize CO2 emissions (25%)
with the objective to be net zero by 2025 without offset
and ahead of the global Schneider Electric pledge. The AI-powered process control 22% Sludge waste
smart factory is equipped with a zero-reject water recycling
station connected to cloud analytics and monitored by an
AI model to predict process drifts and to globally achieve
64% water reduction.
The Global Lighthouse Network Playbook for Responsible Industry Transformation 11Proven value capture
The diverse network now makes an even more These sites and value chains are experiencing
compelling case for how successful Fourth Industrial improvements in resource usage, emissions,
Revolution transformation creates and captures cost reduction, productivity, speed to market,
value across a holistic set of key performance lot size reduction and on-time delivery, just
indicators (KPIs) covering sustainability, productivity, to name a few. And, as the September 2021
agility, speed to market and customization. impact paper1 reveals, the resulting eco-
Lighthouses are proving that their digital journeys efficiency couples environmental responsibility
bring unprecedented efficiency and effectiveness. with the achievement of business goals.
FIGURE 5 Lighthouses’ digital journey reveals impact across operational performance indicators and
environmental sustainability
KPIs improvements Impact range observed
100%
Greenhouse gas (GHG) emissions reduction 8-97%
Waste reduction 4-80%
Sustainability
Water consumption reduction 5-75%
Energy efficiency 1-100%
Factory output increase 2-140%
Productivity increase 3-400%
OEE increase* 2-84%
Productivity
Product cost reduction 4-70%
Operating cost reduction 1-92%
Quality cost reduction 2-100%
Inventory reduction 5-100%
Lead-time reduction 10-99%
Agility
Change-over shortening 11-100%
On-time delivery increase 1-30%
Speed-to-market reduction 10-89%
Speed to
market
Design iteration time reduction 2-98%
Customization Lot size reduction 40-100%
Sustainability Factory End-to-end
*Overall equipment effectiveness
Note: The dots represent the impact level of a given lighthouse against a specific KPI
Source: World Economic Forum Global Lighthouse Network 2022
The Global Lighthouse Network Playbook for Responsible Industry Transformation 122 Proven approaches
have endured
powerful storms
The lessons leading to this Lighthouse Playbook Despite the disruptive changes since COVID-19
were already materializing before the pandemic. emerged – and perhaps even more so because of it
First, two modes of scaling emerged – across – these elements have continued to prove essential.
production sites vs. along value chains – together The growing network has reconfirmed these
with a comprehensive set of KPIs measuring impact. initial insights while detailing how they contribute
Second, Lighthouses revealed six core enablers to business impact and responsible, sustainable
as key to successful Fourth Industrial Revolution growth. Two of the six core enablers – an agile
transformation: an agile approach, agile digital studio, approach and a transformation office – have proven
industrial internet of things (IIoT) stack, IIoT academy, particularly effective.
technology ecosystem and transformation office.
FIGURE 6 The Lighthouses revealed six core enablers as key to a successful Fourth Industrial
Revolution transformation
Agile approach Agile digital studio IIoT stack
IIoT academy Technology ecosystem Transformation office
Source: World Economic Forum Global Lighthouse Network, 2022
The Global Lighthouse Network Playbook for Responsible Industry Transformation 13Lighthouses help companies set a smart course
When it comes to Fourth Industrial Revolution of Lighthouses today will become the standards
transformation at scale, there is no silver bullet; of tomorrow. They excel at illuminating the path
no universal prescription; no one absolutely ahead, offering a unique playbook for the future of
correct course. But Lighthouses have a proven scaling through responsible production, prioritizing
set of commonalities manufacturers can look to productivity, sustainability and people.
as they chart their courses; indeed, the trends
FIGURE 7 The trends of today are the standards of tomorrow
Number of lighthouses in the Global Lighthouse Network by industry and region
Pharma and
medical products
Advanced industries
59
15
5
39
3
16 10
3
7 2
6
5
2 6
Consumer
packaged goods
14
14 Process industries
Americas EMEA Asia
Source: World Economic Forum Global Lighthouse Network, 2022
The Global Lighthouse Network Playbook for Responsible Industry Transformation 142.1 Lighthouses have scaled across production
networks and value chains
Some Lighthouse companies scale up across transformation beyond production sites by reaching
their production networks, implementing four-wall out to the supply chain (upstream) and their customers
transformations at multiple sites. Previous papers (downstream). One example of this is in Johnson &
explored how various companies, such as Schneider Johnson Vision Care. Sometimes scaling up across
Electric and Henkel,2 have done this. Others choose the value chain includes expanding the Lighthouse
to scale up across the value chain, extending the across adjacent functions, such as procurement.
CASE STUDY 1 Value chain: Johnson & Johnson Vision Care
Johnson & Johnson Vision Care, headquartered in manufacturing, testing and order fulfilment informed by demand.
Florida, USA, has deployed a range of use cases to Process automation, robotics and automated guided vehicles
achieve Fourth Industrial Revolution scale-up across utilize smart vision, imaging and scanning to enhance midstream
the value chain, both upstream to suppliers and downstream to manufacturing, testing and distribution elements. Adaptive process
customers. It has enabled personalized customer experiences control and vision systems likewise enhance the midstream,
by ensuring readiness to fulfil orders quickly and flexibly. Several while smart material handling and tracking keep supplies
use cases have enhanced physical supply flow in parallel with moving smoothly. Impacts have been impressive, including a
demand flow. Digital customer collaboration enables smart 40% conversion rate increase, 30% cost reduction, 10% overall
touchless ordering and payment, and E2E visibility and real- equipment effectiveness (OEE) increase, a 99% line item fill rate to
time tracking create a digital link to the customer, optimizing end customers and an order-to-shipment time under 24 hours.
Johnson & Johnson Vision Care scaled up Fourth Industrial Revolution across an
end-to-end value chain to deliver personalized customer experiences
End-to-end value chain Selected examples of solutions X Selected use case
Illustrative
Upstream Downstream
Data flow
2 1 2 2 1
Demand Order Fulfilment Order status Payment
Demand sensing and Smart order and data Process design, simulation E2E visibility and Digital customer
Type of flow
advanced planning management and optimization real-time tracking collaboration
5 2 3 4 5 2 3 4 3 4 1
Physical flow
Raw materials Manufacturing Testing Distribution Customer
Advanced materials Smart vision systems, Predictive and adaptive Robotics and AGVs* Smart material handling
and devices imaging and scanning process control *Automated guided vehicle and tracking
Use case types 1 2 3 4 5
Digital customer E2E visibility and Process Adaptive process Smart material
collaboration real-time tracking automation, control and vision handling and
robotics and AGVs systems tracking
Description of Connecting consumers Creating a digital link Scaling throughput Deploying open and Implementing smart
in a flexible ecosystem between the customer using intelligent closed loop control material handling
selected use Creating touchless and supplier automation systems systems
cases ordering through Developing touchless Utilizing the advanced Utilizing digital Automating pick,
e-commerce integrated planning automation system performance scan & ship systems
management
40%+ 99% 30%+ 10%+ 24h
Impact and
achievements <
conversion rate line item fill rate to cost reduction OEE increase order to shipment
increase the end customers
Source: World Economic Forum Global Lighthouse Network, 2022
The Global Lighthouse Network Playbook for Responsible Industry Transformation 152.2 Six enablers lie at the core of success
Early Lighthouses revealed six core enablers as fundamental to successful Fourth Industrial Revolution
scaling, the importance of which has remained consistent even as the network has more than doubled.
1 An Agile approach employs quick iterations, fast failing and continuous learning. Agile teams bundle
use cases to transform in waves for rapid innovation and refinement.
Example: A digital native manufacturing company in North America slashed production lead times from weeks to days by
emphasizing minimum viable products (MVPs) and fast iteration, working in sprints (usually 2-4 weeks) with continuously
assigned priorities managed by the product owner.
2 An Agile digital studio enables people to work together effectively. Designated spaces with proximity
to cross-functional team members allow co-creation among experts and innovation across all levels
of the business.
Example: A global consumer packaged goods company headquartered in Europe built a hybrid agile studio that included
the virtual co-location of teams within and beyond the business unit. A cloud-based factory digital twin provided access to
real-time data, blending experts and future users in sprint teams.
3 An IIoT stack seamlessly integrates legacy and new IIoT infrastructure to build a stable, flexible tech
backbone. Smart leveraging of existing systems with efficient investment in the new technology
stack limits costs.
Example: A leading appliance manufacturer in Asia established a flexible IIoT stack, integrating dozens of systems to
connect “human to human”, “human to machine”, “machine to machine” and “machine to things”, improving quality, safety
and efficiency.
4 An IIoT academy uses internal and external expertise, employing best practices for adult learning
to reskill and upskill the workforce, building customized learning programmes at the individual level
based on unique personnel needs.
Example: An advanced industries company in North America partnered with universities and institutes to upskill 40% of its
workforce at its Asian sites. Personalized learning rapidly and effectively upskilled workers, transitioning more than 50 roles
from traditional engineering to Fourth Industrial Revolution digital.
5 The technology ecosystem partners with tech vendors, suppliers, customers and related industries,
sourcing the latest capabilities and best practices with access to extensive datasets and
opportunities for co-innovation.
Example: A global top-100 automotive components supplier based in Asia built up a broad ecosystem with 5 top
universities, including Stanford, and more than 30 top tech suppliers to speed up the introduction of Fourth Industrial
Revolution technologies.
6 The transformation office creates a governance hub that supports the Lighthouse launch and
scale-up. It creates transparency on progress and priorities, ensures ongoing value capture and
accelerates change and scale-up.
Example: An electrical equipment manufacturer in Europe followed the set-up of a global digital transformation office
as a change agent with regional and local teams. It managed pacing and progress and implemented a global digital
strategy prioritizing sustainability, trust, resilience, intelligence and efficiency.
The Global Lighthouse Network Playbook for Responsible Industry Transformation 16A closer look at two key enablers
Agile approach Transformation office
Traditional models constrain projects in a Leadership is key because it’s hard for companies
triangulation of time, money and a defined scope to undertake any substantial change, let alone one
with particular parameters. An agile approach, as comprehensive as Fourth Industrial Revolution
while retaining budget and time constraints, digital transformation. The smart governance
instead looks at a project as a set of challenges. model of a dedicated transformation office provides
It then creates small, specialized teams to engage an internal “change agency” that ensures value
them in rapid, experimental iterations. Leaders capture. While the agile methodology depends on
must establish a culture that entrusts workers small, specialized teams, those teams must exist in
to experiment with creative solutions, with the an organizational set-up with clear objectives and
freedom to fail fast and recalibrate. It requires effective collaboration. The transformation office
pragmatic workflows for iterative problem-solving defines roles and responsibilities, positioning people
using MVP designs, with small, dedicated teams for success and ensuring the necessary talents, skills
developing relevant ideas. Priority management and abilities are in place through assignment, hiring
is key and frequent evaluation allows tasks and skills development. It establishes a steering
to shift with changing needs. The value-add cadence, tracking progress and setting meeting
includes boosted employee engagement, focused agendas for project management. This enables
training and skill development while workers get structured reviews of progress in each workstream.
creative in their iterative approach to problem- Meanwhile, by employing the capabilities of the latest
solving. Agile methods let companies scale up digital resources, the office embeds the use of new
quickly while boosting workforce engagement digital toolsets and new ways of working. Ultimately,
(see the agile case study: Petronas). the transformation office ensures that the company
captures the potential value derived from targets and
objectives, keeping tabs on measurable, granular KPIs
(see the transformation office case study: Foxconn).
The Global Lighthouse Network Playbook for Responsible Industry Transformation 17CASE STUDY 2 Agile: Petronas
Malaysia’s fully integrated oil and gas company, meanwhile, teams are dedicated to workflows and sized
Petronas, is a good example of a company using an appropriately for optimal task ownership. Activity planning
agile approach as it continues its Fourth Industrial cards and mural boards provide virtual organization, and
Revolution journey. It has leveraged the key success factors of multidisciplinary squads, including end-users, enhance
workforce engagement, iterative development, cross-functional the teams. Pods led by agile coaches make for seamless
teams and priority management. The company has boosted collaboration. Finally, priority management is flexible from the
engagement by coupling targeted upskilling and innovative top down and group strategies are designed around value.
learning approaches like gamification with a culture that This allows frequent review of backlogs, along with accelerated
fosters experimentation among empowered workers. Iterative resource allocation and review-based decisions within sprints.
and incremental sprints using MVPs, combined with plentiful
feedback and enablement through digital tools leverage the agile This agile team-based approach has led to several positive impacts
methodology, customer experience design and customer journey for Petronas, including 490 employees trained in digital and agile
methodologies to identify pain points for solution development, methodology, 130 ideas developed, 7% of average working
with technology and people dimensions set up for replicability. time spent training and an average 10 out of 10 score for worker
engagement. More than 90% of solution recommendations have
The cross-functional agile team approach has provided a been adopted and five use cases were deployed and adopted in
dedicated virtual space for developing and deploying solutions; ten months, then replicated in two other plants in six months.
Petronas managed key success factors actively to drive improvements
within an agile approach
Workforce engagement Iterative development
– All employees, top down, are engaged – Use iterative and incremental sprints using MVPs for rapid
testing
– Leadership trusts and empowers workers to drive their
own solutions – Frequently collected feedback from users for updates to the
next sprint
– Culture of experiments is lived, which allows for failures
and learning – “Technology” and “People” dimensions set up for replicability
– Targeted up/reskilling and development programmes covering
1
– Enablement through the use of digital tools
100% employees
– Leveraging Agile and CX* methodologies to identify pain
– High adoption through gamification (e.g. “Champions League”) and points and develop solutions
Ways-of-working tracking
Cross functional team Priority management
– Agile teams with dedicated (virtual) space to develop and – Value focused prioritization driven by group strategy and by
deploy solutions applying the max-potential value-hunting methodology
– Teams are dedicated to workflows and sized in a lean way to foster – Flexible priority management is delivered top-down from
ownership for each task leadership, allowing rapid changes in transformation initiatives
– Activity planning card and mural boards to organize teams virtually – Backlogs are structured and reviewed frequently
– Multidisciplinary squads, including end users, and pods led by agile – Accelerated resource allocation and decision-making process
coaches working together seamlessly within sprints (review)
Impact and achievements
> 90%
adoption of
130
ideas developed
7%
of average
1,000+
employees upskilled
490
employees
5
use cases deployed
solution in agile teams working time through digital app trained in digital and adopted in
recommendation, and prioritized spent for and agile 10 months and
that is tracked in down to 6 training replicated in 2 other
plants in 6 months
real-time
dashboards
Notes: 1 Examples of the programmes: DEC (Digital Engineering Consultancy) and DDS (domain data scientist).
*CX: Customer Experience.
Source: World Economic Forum Global Lighthouse Network, 2022
The Global Lighthouse Network Playbook for Responsible Industry Transformation 18CASE STUDY 3 Transformation office: Foxconn
As a core enabler, the transformation office drives The office defined the roles and responsibilities for a
a very clear scale-up strategy that combines transparent chain of command and accountability. It also
and coordinates methodologies and processes provided the ideal digital tools capable of real-time data capture
to pursue prioritized objectives. It sets up transformation, and accessibility for relevant users, establishing a single source
initiates the first pilots, enables learning mechanisms, of truth per workstream. Finally, by maintaining the steering
presents targets and articulates aspirations – all while cadence, the transformation office kept everything on pace with
capturing value. Foxconn, an electronics producer and good communication regarding objectives at regular intervals.
Lighthouse member with four sites in China, has shown With this clear, strategic approach, the company avoided “pilot
how a transformation office can optimize collaboration, purgatory” and maintained the development cadence.
integration and the utilization of technology to drive high-
level impact. By establishing a central transformation The impact was massive, with more than 4,600 global
office, Foxconn was able to achieve a sustainable model of initiatives implemented and over 30 value chains covered in
organizational governance with clear objectives, thus creating bottom-up initiatives. It also trained more than 1,500 leaders
a culture well-positioned for change and development. and certified some 200 IoT talents while garnering ecosystem
partners and university cooperation.
Foxconn successfully managed its lighthouse journey with a strong
transformation office
Governance model A B Common language/
methodology
Created a transformation-
focused organization and Common language/ methodology
culture to set up and drive the across the transformation globally to
organization to achieve enable the organization to be
common objectives constantly in sync on current status
and the immediate focus
Transformation
office
Digital tools D C Steering cadence
Single sources of truth that Clearly defined cadence on
enable transparent performance monthly and weekly basis with
across all value streams structured dialogues to help remove
bottleneck
Impact and achievements
4,600+ 1,300+ 22 200+ 1,500+ 30+
global initiatives initiative owners digital use cases talents certified leaders trained value streams
implemented involved deployed in IIoT covered in
bottom-
up initiatives
Source: World Economic Forum Global Lighthouse Network, 2022
The Global Lighthouse Network Playbook for Responsible Industry Transformation 193 Responsible
transformation at scale
Undoubtedly, the world has changed drastically on responsible transformation. Lighthouses are
in the past two years. These challenges, along harnessing Fourth Industrial Revolution technologies
with ambitious climate goals, have boosted the that enable them to use strong transformation
prominence of enviromental, social and governance governance to accelerate scaling, ensure eco-
(ESG) concerns; as such, companies have sustainability and increase workforce management.
had to redouble their focus on environmental Now, with more Lighthouses, more use cases and
sustainability and workforce engagement. In the more data points than before, the network’s insights
past, sustainability and workforce engagement are more compelling than ever, providing the keys
were aspirational ideals – now, they are essential. to environmentally sustainable growth. This new
Lighthouses have shown that to grow responsibly, Global Lighthouse Network Playbook, informed
companies must scale their transformation with by these front-runner organizations, shows how
these priorities front and centre. manufacturing and the supply chain will evolve in
the next five years. It also shows how companies
Accordingly, the Lighthouse Playbook is focused can transform at scale in a responsible manner that
not merely on successful transformation but also prioritizes people and the planet.
FIGURE 8 The Lighthouses have proved that impact from the Fourth Industrial Revolution is
responsible by tackling ESG elements, including sustainability and workforce engagement
Overview of the ESG components, which have increased in importance in the last two years
Environmental Social
Taking care of our planet and
Responsible
Building up a stronger
the surrounding environment workforce and community
Energy Water Human capital Voice of
development the worker
Greenhouse
Waste Health Labour
gases (GHGs)
and safety standards
Circular economy
Workforce engagement
Sustainability
Governance
Establishing a set of practices, controls and procedures to
govern, make decisions and meet stakeholders needs
Business Governance
Ownership Accountability
ethics structure
Source: World Economic Forum Global Lighthouse Network, 2022
The Global Lighthouse Network Playbook for Responsible Industry Transformation 203.1 Sustainability
Manufacturing is a resource-heavy undertaking Lighthouses are defying the conventional wisdom
worldwide. The September 2021 impact paper entitled that environmental responsibility is inherently at odds
Global Lighthouse Network: Unlocking Sustainability with productivity and, by extension, profitability. Even
through Fourth Industrial Revolution Technologies3 as these front-runners embrace green technology
explored how the climate crisis has pushed and other breakthroughs, they are also revealing how
environmental responsibility higher than ever on the successful implementation of the Fourth Industrial
list of industrial priorities. It illustrates how Lighthouse Revolution transformation can simultaneously
organizations are setting the bar for environmental augment green measures while bolstering production
stewardship through pragmatic, effective and efficiency. Thus, they are achieving eco-efficiency,
future-focused sustainability efforts. Commitments wherein sustainability and competitiveness are not
to (and execution of) measures that reduce energy only compatible but, in fact, are interwoven. The
consumption, water impact, carbon emissions and case study below looks closely at how Western
waste generation – led through a good governance Digital has achieved a major sustainability impact
structure – are at the core of eco-sustainability. even as the business has grown substantially.
CASE STUDY 4 Sustainability: Western Digital
By implementing a variety of Fourth Industrial By transforming high-mix, high-volume production to a lights-
Revolution technology solutions such as an IIoT out integrated operation with automated processes, robotic
platform and machine learning, American electronics transportation, automated storage and material management,
manufacturer Western Digital succeeded in optimizing energy along with the integration of an intelligent remote production
and water consumption while reducing greenhouse gas command centre and factory digital twin, the site reduced
emissions and waste at its Penang, Malaysia site. Remarkably, machine idling time to gain 15% overall equipment effectiveness
the company achieved this impact even as it experienced a (OEE) and a 3.5x unit per hour productivity improvement, thus
40% compound annual growth rate in volume. reducing the energy consumption per machine.
Real-time IIoT applications powered smart energy usage. Western Digital has achieved a step-change in sustainability
Key to this was an intelligent, multivariate model-based, self- impact. In addition to cutting energy consumption and
regulating plant management system incorporating more than greenhouse gas emissions each by more than 40%, the site
1,000 IIoT sensors across more than 500 pieces of equipment has optimized water consumption by a factor of 44% and
and 15 utility systems. This system has provided flexible reduced material waste by 15%. As a result of this tremendous
adaptation to volatile production scheduling amid a fourfold sustainability impact, the site received certification by the
increase in customer demand over four years. Malaysia Green Building Index.
Western Digital achieved a major sustainability impact through
the Fourth Industrial Revolution while business grew 40%+
In order to become more sustainable despite the 40%+ CAGR* business growth, the site implemented Impact and
a wide range of Fourth Industrial Revolution technology solutions, such as an IIOT platform and machine
learning, to optimize energy and water consumption and reduce GHG emission and waste achievements
Smart energy usage via real-time
IIOT applications
Lights-out automation with digital
twin capacity 40%+
energy consumption reduction
An intelligent, multi-variate model-based Implemented lights-out operations through
self-regulating plant management system, automation tied with an intelligent remote
40%+
architected with 1000+ IIoT sensors, 500+ production command centre and a digital
piece of equipment and 15 utility systems twin for high-mix, high-volume production
GHG emission reduction Scope 2
44%+
water consumption optimization
As a result, the site is certified with the Malaysia Green Building Index (GBI)
15%+
reduction waste material
*Compound annual growth rate
Source: World Economic Forum Global Lighthouse Network, 2022
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